Bear Pörn

I’m not feeling so great today and I hope the few of you who are not on vacation can forgive me if I make this one snappy. On the equities side not much has changed since the overnight ramp and from a trading perspective the current tape is rather uninteresting. I’m sure you’ve got better things to do and so do I. The futures and forex side look similarly lackluster – so instead I decided to indulge in a bit of bear pörn today. Which however comes with a disclaimer: Price continues to point upward and the LT bullish trend remains unchallenged – so take the following charts with a x-large helping of salt.

On a short term basis I’m seeing a healthy divergence on our GBP/JPY equities correlation chart. Thus far gravity remains suspended and the E-Mini has happily bubbled higher. If I was ST long I would probably take profits here in anticipation of a little shake out.

Long term I have been watching this divergence on the VIX:VXO ratio – as you can see front month ATM premiums have dropped quite a bit in comparison with the remainder of the front month option chain (thus pushing the ratio higher) and we are now seeing a little correction which started early this month. So far price has not responded and per prior examples it may be delayed. If this divergence continues I would get very cautious on a 1-week forward looking basis.

However a similar divergence is seen on the VXV:VIX which compares quarterly implied volatility with front month IV. That one should make anyone exposed to the long side a lot more nervous – and again if it keeps dropping then price will most likely respond eventually. However here I would expect a multi-week correction, once it happens.

A bit more subtle but supportive is the formation we find on the SPXA50 vs. the SPXA200. It seems breadth is diminishing after having reached a reversal zone near the 1.0 mark. Again price has ignored it this far and that’s not unusual given prior context. I wouldn’t worry too much here yet but keep an eye on this one. On its own it only has limited meaning but if the two prior charts remain in correlation over the next few weeks then we do have enough evidence to warrant caution on the long side. After all it has been while since we have seen a thorough medium term correction.

Bottom Line: If you are long then there’s nothing to worry about just yet – stick with price and trail your stops as your system dictates. We need to see more extreme measures until we would switch the bullish case into Defcon 3. But early signals are flashing and we ought to keep an eye on them. I leave you with this:

That’s right – no more Mr. Nice Bear!

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Cheers,

Setup Bonanza!

Interesting turn of events this morning – although my growing cautiousness concerning the equities (long) side has thus far paid off I’m not yet convinced that we’re heading into another correction. Be this as it may, I did get positioned nicely courtesy of the TF this morning and I intend to hold this position for now or until stopped out at break/even:

Although there was a quick fake out toward the NLBL my stop was well placed and thus far I’ve racked up almost two R. Which is nice but not really what I’m interested in – I’m turning this into a lottery ticket to the downside given what I’m seeing on the short term momo side:

VIX:VXO (which I showed to the subs yesterday) continues to point downward. Again, it could be a fluke or a bear trap but I already earned my entry and I’m sitting pretty right now.

Out of fairness I should however show you guys the Zero Lite which is rather flat today. So not much participation on the downside here and I give this 40% chance to continue lower. I don’t see a long entry here right now either unfortunately – once I do I’ll let you guys know.

Update on the Dollar entry which I hope some of you guys grabbed yesterday. The right panel shows us at the 2R threshold and that means we are either moving our stop up if we close above it or close our position if we close below it. That is via the CrazyIvan campaign rules. If I would employ Heisenberg then I would have taken partial profits a bit above 1R and moved my stop to b/e. So I leave this in your capable hands – it’s possible that the Dollar is going to enjoy a run higher. But heck – it’s the Dollar right? So I’ll stick with CI rules on this one ;-)

So many awesome setups today – here’s crude gracing us with a very interesting configuration I tried to explain on the chart. Could swing either way and we are near the $100 mark – will definitely take whatever trigger this throws at me.

And I cannot believe I’m actually giving this one away for free as it’s my favorite. I have already gone long via this morning’s short term entry near 104. My stop is at today’s lows and all that ties very nicely into the IP and RTV-L that any of you leeches may grab later tonight. Absolutely love this setup and I think it’s coiled up and ready to snap.

More goodies below the fold – it’s a veritable futures bonanza today – seems Hoss is getting all excited. Please grab your secret decoder rings and join me in my freshly painted spring lair:


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Cheers,

Dude Where’s My Moto?

As some of you already know I started the day dealing with a family emergency but it didn’t stop there. Just when I thought that I had a lid on things and got ready to hit the gym for some much needed stress relieve I realized that someone had grifted my moto overnight. You should have seen my face as I was standing there with my helmet in my hand and cursing like a sailor with turrets. I thought it couldn’t get much worse but somehow this day continued to prove me wrong. Well, I’ll spare you the ugly details – nobody likes a cry baby.

Although the Spanish cops don’t have the notoriety of the LAPD I have a feeling they won’t have any problems identifying the ole’ Mole mobile – it has some rather distinguishing features. Well, as the universe seems to have it out for me today I better treat carefully and keep a low profile. So forgive me if I run through today’s charts quickly so that I can curl up somewhere and lick my psychological wounds ;-)

Quick update on CAD/CHF which triggered today. We are about 0.7R in and nothing really happens until we touch 0.8058’1. If we close above it we’ll advance our stop to the 1R mark – if we push above it and closer below it we will exit EOD.

Equities are still on the run and thus far the 25-hour has been holding like a champ. There’s the 100-day BB approaching above and it may mean soft resistance.

The volume profile is running thin but that doesn’t mean that some headline event tomorrow can’t pop it higher. You know how the cookie crumbles.

Possible Failed Shooting Star setup on the NQ starting tonight. I’m not holding my breath but it’s the only ticket on the equities side right now.

I do however think that the bulls may have gotten a bit ahead of themselves here, so I recommend caution on the long side. For example here is the NYSE advancing/declining ratio which is dropping against a rising SPX.

But I got more where that came from – please join me in the lair:


More charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don't waste time and sign up here. And if you are a Zero subscriber you get free access to all Gold posts, which gives you double the bang for your buck!

Please login or subscribe here to see the remainder of this post.

Alright, that’s all I got for today – time to release the hounds!

Cheers,





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